Should I Get a Home Warranty?

[LeBlanc]

I've come to respect and appreciate the posts on this forum so I figured why not get some more insight from you fellow financial savants.

I'm buying my first home and am being offered to purchase a home warranty from company X. It would be my cost because it's a foreclosure and the bank selling the property isn't offering to pay.

So, I did some research on the warranty company and couldn't find one good word about it. I decided to research other warranty companies, and would you believe that I couldn't find good words about any...in the whole country?

So, with that being said, I don't know if I'm all that interested in paying for something that I may or may not use...and in all likelihood, would have a claim denied because of all the loopholes (from what I've read in 100's of reviews about claim nightmares).

I'm sure I'll get a lot of "well, if the A/C unit or water heater goes out, you'll have to pay for it out of pocket, etc..." Well if that's really the only big concern, I'm not all that concerned.

Your thoughts?

[REWahoo]

I think you'll find many would say no. Here's an old thread on the subject:

Home Warranties - Worth it?

[LeBlanc]

Well that about sums it up. Thanks a lot.

[OAG]

Home warranty: NO! Home inspection prior to closing and specified in the contract (and who pays for issues found): YES!

[cute fuzzy bunny]

Oh yes, do get a thorough inspection. And ask the bank as part of the closing negotiations to pay for the home warranty. Its automatic around here, but I've not done a foreclosure purchase before, so maybe they want to haggle with you over it. I'm thinking that the bank would like to get rid of the property and given that its only a few hundred bucks, would be dumb to screw up a sale over it.

Anything old and on its last legs?

It came in handy in our new house a few times. First day I was here I turned on the dishwasher and it caught fire. No, really. I got a box full of water to catch fire. Home warranty company replaced it. Very slowly. Three weeks from call to install because they had to order the d/w and 2 weeks later whirlpool told them they just werent going to get that one out in a timely manner (really?) so I got the next model up. $50.

About a week later the guy tearing up my laundry room floor to tile it discovered a leaking pipe that had rotted the floor. Called and a plumber showed up an hour later, replaced two valves and some pipe. $50. I had to fix the floor myself.

Near the end of the 1 year coverage, my furnace got a little flaky. I could have had them replace the part that wasnt working and saved $250-300, but I was going to replace the furnace anyhow.

[LeBlanc]

Inspection will be done and of course there is a back-out clause if there are any issues. Being that it's a foreclosure bank owned property, it's sold "as is" so if there are any repairs that need to be made, they will be at my cost, or we renegotiate the price, or I can walk away.

I will not be getting a home warranty. The home is in North Las Vegas and is 6 yrs old by the way.

[Texarkandy]

I'm on my third home - in lieu of opting for the home warranty - I generally try to make sure there's nothing wrong with the house or it's systems before I buy it - then if something goes wrong later that I (or the inspector) missed , I just deal with it.

Also, now that I know more than a thing or two about houses I am also a bit surprised at how "cursory" those standard home "inspections" are)

[Donzo]

I got a warranty from the last owners of my current home. It was great! The gas heater went out in the guest house - would have cost $600. to fix/replace parts. We had an electrical problem in the pumphouse - would have been $100.00+ to fix - this is one I prob. could have done myself...but why bother? Also, I was still working at this point and traveling alot. We had a few other minor electrical issues(about another $150.) it was like calling the landlord to come out and fix it.
I think the insurance cost about $500. it more than paid for itself - esp since I didn't pay for it!
I am back to DIY - It's amazing how much you learn as a DIY homeowner.

[samclem]

From a dollars-and-sense persepective, these home warranties have a very poor payoff. The only time I would buy one is as a tool to help sell a house (to put the buyer at ease). Spend the money on a good home inspection. Consider being there with the guy/gal, as they'll do a better job if you are watching, and they'll explain stuff that they otherwise wouldn't bother to write up. Bring a digital camera and a notepad with you. You might even get a better price on the place when you bring the write-up with you (and an estimate to fix the stuff that was found.)

[harley]

In my case we were buying a house that we knew had a number of issues. It was my in-laws house, and we were buying the half DW hadn't inherited from her sister. The Home Warranty paid for itself 5 or 6 times over (new electrical panel, major wiring issues, things like that).

That being said, I doubt I would buy one on a newer or decently maintained house. The in-laws had been sick for a long time, and things ran down even with us trying to help as much as possible.

Definitely get an inspection. It's amazing what a well trained inspector can find. If they find a lot of potential trouble spots but you still want the house, then you can get the home warranty. Good luck.

[shayari]

If the major appliances are too old OR you don't have the discipline to learn and fix things DIY way, then you should buy one. I agree there are bad reviews everywhere, but you can certainly chose the one with least number of complaints.

Check out the tactics discussed here about dealing with warranty companies in their own way. Scroll down and look for comments posted by LegalCohen.

"I also investigated lawsuits that had been filed against American Home Shield in Georgia, which is where I live. I found about 15 cases. The majority of cases had been filed in small claims court. As I reviewed the cases, I discovered that none of the cases had been litigated. In every instance, the case had been settled to the Plaintiff’s satisfaction although the details of each settlement were not part of the case file."

Home Warranty Reviews » American Home Shield (AHS)

I also suggest you pick the home warranty insurance company with least # of complaints on the same web site

Hope it helps